HFMA Payroll Fundamentals Program Superannuation and the recent legislation changes Presented by Richard Lynch and Matt Buchlak
A bit about us Before we get started This presentation contains information of a general nature only. Please consult a financial planner to review your personal circumstances. A product disclosure statement (PDS) is available today or from our website.
Legislative changes to super What we ll cover Contribution considerations for payroll SuperStream Q&A
A bit about us 740,000+ We re helping to provide a better financial future for our members¹ 240 Seminars attended by over 10,000 members around the country last year Best Public Sector Fund SuperReview Super Fund of the Year Awards 2017 $62bn $55bn in super + $7.3bn in retirement savings 200 Quality advice provided in largest member-owned, financial planning business in Australia over 200 financial planners June 2017
A bit about us We re proud to be the default super fund for the Victorian Public Health Sector Working with Victorians 183,000 members in Victoria $14.2bn funds under management in Victoria
Legislative changes to super
Proposed changes from 2017 budget The following changes have not yet been legislated First home buyers able to contribute money to super to save for a home deposit up to $30,000 ($15,000 p.a.) Increased Medicare Levy to 2.5% from 1 July 2019
Effective changes from 2016 budget The following changes became effective on 1 July 2017 Reduction in concessional contribution cap to $25,000 Reduction in non-concessional cap to $100,000 Catch-up concessional contributions (from July 2018) Higher contributions tax for >$250 k income earners Tax deductions for personal contributions
Contributions
Extra contributions Before tax Concessional contributions After tax Non-concessional contributions Deducted from gross (before tax) pay and referred to as salary sacrifice. Deducted from net (after tax) pay and can be either regular or one-off contributions.
Salary sacrificing Start growing your benefit earlier Increase saving & reduce income tax Be aware of contribution limits Income Marginal tax 2017/18¹ Super tax $0 - $18,200 $18,201 - $37,000 $37,001 - $87,000 $87,001 - $180,000 $180,001 - $250,000 $250,001+ 0% 19.0% 32.5% 37.0% 45.0% 45.0% 15%² 15%² 15% 15% 15% 30% ¹2% Medicare Levy not included above. Medicare Levy thresholds vary depending on your circumstances. ² LISTO (Low income superannuation tax offset). A refund of 15% contributions tax, up to a maximum of $500 when your taxable income is less than $37,000
Contribution limits Before tax Employer contributions (SGC) Salary sacrifice Additional deductible contribution After tax $100,000 per annum Can bring forward 3 years contributions if age under 65 $25,000 per person per year in total Catch-up contributions Contribution caps from 2017-18 financial year
Concessional catch-up contributions Annual cap From 1 July 2017, the cap on concessional (before-tax) contributions reduced to $25,000 per annum Before regardless tax age. This applies to both SG and salary sacrifice contributions, which means the total of these two types of contributions count towards the cap. Catch-up concessional contributions From 1 July 2018, provisions have been introduced to allow a five year carry forward of unused concessional contributions. Additional concessional contributions can be made if: you have a balance of less than $500,000 before the start of the financial year and; you have unused concessional cap amounts. Unused annual concessional contribution cap amounts only accrue from 1 July 2018 and the carry forward option will first be available in the 2019-20 financial year. Contribution caps from 2017-18 financial year
SuperStream
Understanding refunds Refunds are often caused when an employee changes super funds and rolls their current funds over before receiving all processed contributions By law, we must process rollover requests within 3 business days and close the member s account If an employee decides to change super funds, payroll could advise them of any processed SG contributions that are due to be paid to their current super fund Employee could consider delaying rollover request until all processed payments have been made to avoid refunds
Common issues for employers Notification regarding non payment of Electronic Service Address (ESA) Employees with SMSFs are often required to pay an annual fee for their ESA. If this fee is not paid, automatic error messages may be sent to employers We can assist with providing an email template to address this issue with your employees Issues with defined benefit data (salaries, service fractions, hours worked) This issue generally cannot be fixed by employers Payroll staff may be contacted by us to correct data
Payroll support Client Relationship Managers and Employer Support Team We can provide practical training and support Employer Support Team can help with refunds, clearing house and any super related payroll issues Email: employers@firststatesuper.com.au Phone: 1300 650 873
Questions?
Thank you!